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Crossing the Chasm with Mobile Apps

Reading my emails this morning, I was surprised with a particular one coming from Moglue, a long time competitor of Kwik. After three years promoting and selling their DYI (do it yourself) storybook tool, they just announced they are closing the business due lack of continued funding (according CrunchBase, Moglue has received a total of $990K in the period of 2 years).

Although the announcement is really surprising (I wish Kwiksher had the almost $1M in investment as well), there are a few indications happening in the market at this moment that may explain some of their reasons. Just to make things clear, my words below are just assumptions as I never talked to anyone from Moglue to learn more about the “real deal” behind their decision. Again, it is just my thoughts on what I have seen and heard operating Kwiksher.

Crossing the Chasm

In 1991, Geoffrey A. Moore wrote a book called Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers, which became a reference for marketeers around the world. Moore’s focuses on the specifics of marketing high tech products during the early start up period. The chart he used to describe the several phases of a product adoption timeframe is still used and can be easily adapted to the current mobile app business (and too for tools like Kwik and Moglue):

Not wanting to describe each phase in detail (besides not being an expert in the topic, I strongly suggest you to read the book), lets quickly take a look of each segment of the chart:

Innovators: are the people who “jump” into products and/or companies who try to address situations and problems not perceived before. These products cannot only target innovators, because they are a small amount of consumers. However, innovators are the first ones who will try the product, provide feedback and promote it (if the product makes sense). Due the nature of playing with the unknown, and the usually higher costs, due the absence of demand for sales, innovator products promptly confront their first chasm (a big barrier that is the first “make or break it”). Many innovations don’t succeed their smaller chasm.

Early Adopters: are a bigger group of users. They are the ones who will create long lines to get a new gadget. Products in this category already succeeded their first obstacles and now try to get space with the majorities. Sales pick a lot for early adopters products but still, due the size of the market, they are not enough to sustain large operations, specially when the big chasmstrikes. Here, it is the moment of truth for the product or technology: will it become mainstream or not? Do users really need it? Is the price affordable to the masses? Are the competitors (yes, there are competitors in this phase) better?

Majorities: this is pretty explainable. They are the average consumers, who get the product because they are seeing it in the stores and their friends are talking about. If a product gets the attention of the majorities, being really useful for the masses, their developers will enjoy the explosion in sales and everything that money brings 🙂

Laggards: are the worse type of customers a product may have. They will only spend money after years of marketing activities, usually when the product is already dying or being reinvented. Everybody knows something that stills use a VCR, right?

Sorry to spend time bringing the basics of the chasm chart, but I really think it may explains what is happening with Moglue, with Kwiksher and with YOU and YOUR apps.

As you may noticed already, NOBODY is making big money (ok, there are a few exceptions here and there but, in most cases, they are companies who were already dominants in other segments of the technology industry – for example, the big game studios) with mobile apps. The same applies for tools for creating mobile apps. The reasons may be many but I really think they can be compiled into a single one:

It is still an Early Adopters market

Even with the Apple AppStore being launched in 2008, things are changing constantly. Price points for all categories of apps are not yet defined (which clearly affects YOUR sales and consequently OUR sales). Also, the cost of app creation is still relatively low, which somehow explains the low quality of the majority of apps and their ridiculous price points, varying from free to $0.99 – what, in real world, can you purchase or build for less than a dollar?

Crossing Our Own Chasm

As mentioned earlier, because the development costs are relatively low, anybody, not necessarily prepared, can create an app – check how many templates, free sdks, DYI tools with revenue sharing, and even things like Kwik, costing a few hundred dollars do you know.

Across history, any technological development required skill and expensive tooling. I am not saying things should be really expensive but, in comparison, would you use and pay the same for a car made by your neighbor baker, with cheap tools or one safety tested by a professional automobile company? Before you say this comparison is not valid, what about a book: would you allow you children to read an educational book with a metal binder falling apart and with “non-revised” wording?

Like the crossing the chasm above, I think we, the ones creating apps or tools for app creation, are facing the big scary chasm at this moment. While some may blame others (low prices, low quality, too many apps, <add here any other excuse>), I strongly believe we must stand behind our products, our audiences and our values.

Since I launched Kwiksher, I have noticed a constant change of users. Most people who purchased Kwik 1 did not updated to Kwik 2 and so on. Talking to some of them, I learned they thought just a nice app would be enough for automatically sales. As the money never came, they went back to their regular lives.

To them, to YOU and, every day to ME, I say: “stand behind you products”! If you product is not ready yet, finish it first, instead of trying to sell it for $0.99 or giving it for free. Do your self-evaluation. Although some people can be totally blind and believe they have a masterpiece, even when others says “it is bad”, they are exception. Most people can really find by themselves their illustrations are not that good, or the story is not perfect yet.

If you product is really good, it cannot cost $0.99 (which after the store cut will be only $0.70). When you sell a quality product for $0.99, you are helping to set the market for crap products (you put yourself in the same category of those ones doing almost nothing) – you will never be able to charge more in the future! It is better to sell one unit for $3.99-7.99 (it depends of what you are selling) than a few for less than a dollar. Again, WE ARE THE ONES BUILDING THE ROAD!

In sum, as an Early Adopter, remember the road to that amazing, solitary, beach or mountain of your dreams will have bumps. You may stop at some tolls without the money. Your tires will be flat. You may not even get there. However, when doubt come, remember you are there for the entire ride, not an instantaneous prize.

I sincerely wish a great holiday season and an amazing 2014! Lets make this journey together!

8 comments

Couldn’t agree more! If we are building an app publishing business, we are in it for the long haul, and will profit accordingly. No sustainable business is built overnight. Consumers are already becoming conditioned to “99 cent apps = garbage” and I do not produce garbage, hence I will not put my products in the “garbage” tier.

This is a very exciting path we are on, changing almost daily and for those of us dedicated to jumping that chasm, I have little doubt that we will succeed. But that success won’t come tomorrow. More baseball games are won by single hits stacked up on the scoreboard than by home runs.

Being positioned in the market and learning the ropes before that “big chasm” jump happens is a very good place to be indeed!

Alex, this is an excellent article. I keep track of and update Kwik with plans to create apps in the future. I currently have too many projects (apps. printed books, movie scripts, freelance work, and in addition, a full time job) so I had to put a couple projects on the back burner. However, when I can jump back into the Mobile app arena in a year or so. I will remember your point about pricing etc.

Thanks for the post. I’m still looking for insight into the Moglue closure. If you hear more.. please do post. I think it’s possible that they grew too quickly from investment rather than specifically around customer/client needs/orders. It’s a great product… it would seem to be a flaw in their business model and approach. I think their decision not to put out their own books might also be part of it.. after all legacy publishers are suspicious of pure technology but when it comes wrapped around a company that puts out books and understands publishers’ mindset as such; it’s more palatable etc. I wonder what your thoughts are on this? I’m checking out Kwiksher.. looks brill. Look forward to hearing from you.. Best, Emer (emer@ewowbooks.com)

Very difficult to really find what has happened. Clearly we see a market in its infancy. Technology, for sure, is not the most important thing yet. Unfortunately, content seems not to be the key too. There are lots of good content lost in the millions of apps, while not so good content showing up in the first pages of the stores.

Lastly, I have received recommendations and requests to create “own books”. The issue (and consequently decision of not doing so) is the fact this is a totally different industry than the one I know about (publishing versus software development). So, I do understand when others (Moglue included) decide not to follow this path.

Thanks Alex, I think that the key is doing both: own books and SW development. I think this wasn’t the best business decision on Moglue’s part with such good technology on offer – they could easily have fulfilled their own great books. In my view, they are no longer separate industries as such, in that SW and Publishing go together in the digital epub space. Don’t you agree?
Yes, I agree it’s an industry in its infancy too. It will be interesting to watch how things develop of course. Be good to keep the conversation going. Look forward to hearing more of your thoughts. Emer 🙂

Thanks for great post. I`m TaeWoo Kim, CEO/co-founder of Moglue. As you`ve guessed there are many reasons why we`ve decided to stop doing our business.

Of course market itself was one of issue but the main issue was internal issue(co-founder issues) and I`ve lost a vision for this business. Unfortunately, one of our co-founder who came up with this idea left the company and a year ago and I`ve tried to keep operating Moglue. But I`ve realized that I can`t work on this 2~3 years more to cross the chasm. Obviously, there should be many more reasons, but honestly, it was main reason why I`ve decided it.

I`ll start my new start-up soon and I hope kwik make it happen in this industry in near future. If you want to be connected with me via email or linkedin or facebook, please feel free to find me via kimtaewoo1201@gmail.com

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